Montenegro citizenship by investment: Program overview

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Kristina Ruzhilo 29.05.2019

Interest in second citizenship programs is growing with each passing year. Which is quite logical, since passport programs offer a variety of new opportunities for investors. Previously, it was possible to obtain a European citizenship through investing in a Cypriot, Maltese or Bulgarian economy. This year, the second citizenship market welcomes a new member, Montenegro. That is why many are already seeking to find out how profitable the Montenegrin CBI program is and what are the ways to enter it. After all, the program looks quite good, at least, at a first glance.

But is the program actually worth your attention? What is the difference between the Montenegrin citizenship and Caribbean passports, or citizenships of EU member states, Cyprus and Malta? Which is better, the Montenegrin citizenship or Portugal’s Golden Visa program? We have looked into the nuances of the newest CBI program and are ready to share our findings with you. It is up to you, however, to have the final say.

Why would an investor consider Montenegrin citizenship?

Montenegro is drawing the attention of many investors from Russian and other CIS countries. From 2008 to 2018, direct investment from Russia amounted for more than a third of this country’s GDP. Additionally, about 30% of all foreign companies in Montenegro had been founded by Russian citizens, according to RIA Novosti agency’s interview with Marko Milačić, a Montenegrin journalist, politician, and former participant in the 2018 presidential election. Russians are investing mostly in real estate, hotel businesses, cafes and restaurants.

About 200,000 Russian citizens visit Montenegro every year, with 40,000 being local homeowners. According to the Russian Embassy in Montenegro, about 6,000 citizens of the Russian Federation are permanent residents of Montenegro.

A Montenegrin passport allows visa-free entry to 125 countries. The country’s economy is recognized as one of the fastest growing in the Balkans. Montenegro is a member of NATO and the lead candidate for EU accession. Thus, in addition to visa-free travel in the Schengen countries, all citizens of Montenegro will soon have the opportunity to reside, study and work in the EU.

The Montenegrin CBI program became the 17th in the world. The spouse of the principal applicant, their children under 18 years of age, and parents may also apply for a passport. The paperwork takes up to six months, and citizenship is then issued for life.

It is worth noting that in recent years more and more wealthy investors are receiving their second passports in exchange for investment. According to the 2019 Global Wealth Migration Review, 108,000 dollar-millionaires (HNWIs)migrated in 2018, compared to 95,000 in 2017. Most of these individuals moved to the United States, Australia, the United Kingdom, Portugal and Cyprus.

How much for a Montenegrin passport?

To obtain a Montenegrin passport, an investor needs to fulfill the two investment requirements:

  1. Make a donation to the government fund in the sum of €100,000;
  2. Purchase real estate (invest in a resort-type development project) by choosing either of these options:
  • by investing at least €450,000 in a south-based (probably coastal) project;
  • by investing at least €250,000 in a north-based (probably ski resort) project.

In total: The minimum investment amount is €550,000 if purchasing real estate in the south of Montenegro, and €350,000 for investing in northern property.

In this article, we will overview just the key points of the Montenegrin CBI program; here, you can learn more about the application submission process.

Today, the Montenegrin real estate market is stable. But practice shows that in smaller countries that have their own second passport (CBI) programs, real estate tends to be overvalued — which is and has been true for Cyprus, for instance. In the Caribbean Basin, prices are also over-hiked by 30–50%. In Montenegro, there are additional prerequisites for increasing prices per square meter:

  • the construction of the innovative autobahn that will connect Montenegro with Serbia’s Belgrade;
  • a growing number of tourists (+15% per year);
  • low-cost airline flights.

Choosing a decent real estate project in Montenegro, though it may prove to be not that effortless, isn’t impossible. Investors are especially interested in real estate in Budva, Herceg Novi, Tivat in the south, and Kolašin and Žabljak in the north. Real estate in these cities is considered to be rather liquid. Over time, it is possible either to sell one’s real estate object and get the invested funds back, or to keep possession and earn from 4% to 6% as an annuity. As for the per-square-meter prices, there is a clear gradual increase from Ulcinj towards Herceg Novi.

Taxes on and indirect costs of owning real estate

The tax system of Montenegro is quite lax and not at all complicated. Tax rates imposed on property buyers, sellers and owners are among the lowest in Europe.

  1. Tax when purchasing property. None if you’re buying directly from a developer who pays VAT. If the seller is not a VAT payer (e.g., is a natural person), the buyer pays 3% tax.
  2. Annual property tax. The amount and procedure for payment is established by local government bodies. The rate may vary from 0.1% to 1%. It all depends on the object’s location, class, how far it is from the coastline, and the rest of the 12 factors.
  3. Annual tourist tax. Paid by foreigners who own a “second” real estate object in Montenegro, such as an apartment, a suite or a house used for recreation and temporary residence, as well as accommodation in the tourist area (along the Adriatic coast).

Note: To save your time, we have created a cost calculator that would allow you to find out how much you’ll be required to pay for additional fees for your type of family. Follow this link, fill in necessary fields and your manager will send you the total cost of obtaining citizenship of Montenegro.

Montenegrin passport by investment: Principal advantages

The Montenegrin immigration program has the following advantages:

  • A green light from banks: No issues with opening accounts in progressive European banks.
  • Real estate is in demand. According to unofficial data, only Russian citizens have purchased more than 30,000 real estate objects in the country.
  • Possibility to obtain an E-2 visa for the US. This type of visa is not available for citizens of China, the Russian Federation, South Africa and some others. An E-2 is a business visa that allows investors to live and work in the States. Over 41,000 E-2 visas were issued in 2018.
  • The prospect of EU accession: Montenegro is expected to join the European Union member countries in 2025.
  • Visa-free travel to 125 countries. On the map below, you can see which countries Montenegrin citizens can visit without a visa, or receive a visa-upon-arrival/an e-visa:

Montenegro citizenship: visa-free travel card for citizens of Montenegro

Montenegrin citizenship vs Portugal’s Golden Visa program: Which wins?

Since 2012, over 7,000 financially independent individuals have taken part in a certain European CBI program, the Portuguese Golden Visa — an alternative name for obtaining this country’s residence permit in exchange for investment.

Portugal’s Golden Visa program (ARI) offers a number of unique advantages:

  • Golden Visa holders may apply for Portuguese citizenship within five years’ time. In Spain, Greece and other countries with Golden Visa programs, naturalization may take up to 10-12 years.
  • Golden Visa holders can enter and move around the countries of the Schengen Area visa-free, while citizens are entitled to visa-free entry to the US and the UK.
  • The cost of the Portuguese Golden Visa starts at €350,000. One would be required to invest in real estate, sans the requirement to make a non-refundable donation into a state fund.

It is possible to do a side-by-side comparison of the Montenegrin CBI program with any of its competitors, as we have developed a tool to help our clients see pros and cons of any given programs and do price comparisons.

Will Montenegro’s brand new CBI program send the popularity of the Portuguese Golden Visa into a nosedive? Unlikely. Granted, it is only possible to become a fully-fledged citizen in five years, but the requirements of Portugal’s passport program are quite permissive. Besides, Golden Visa holders get instant access to Schengen Area states, and have the opportunity to return the investment in full.

And, finally, the emergence of the Montenegrin passport program will likely create a stir within the market, which will lead to overvaluing properties. A similar situation may be observed in Cyprus… but not in Portugal.

Montenegrin passport vs Cyprus and Malta

Cyprus and Malta are two other European countries offering their citizenship in exchange for investment. Citizens of these countries actually have more advantages than holders of Montenegrin passports. With a Cypriot/Maltese passport:

  • You can enter and stay in the countries of the Schengen Area, the EU, and the UK sans a visa 365 days a year;
  • Malta has a visa-free entry regime with the US, Canada and Australia; for Cyprus, it’s Canada and Japan.
  • There are no restrictions on employment and education within the EU.

Compared to Maltese and Cypriot passports, the passport of Montenegro is, in essence, a Schengen visa. Montenegrins will be able to enjoy all the advantages of a European citizenship only once their country joins the EU, which won’t happen until 2025. Also, Montenegrin passport holders will have to obtain a visa to enter the US.

Currently, it would seem that the Montenegrin CBI program wins only in terms of its cost: €350,000 versus at least €880,000 in Malta versus at least €2,150,000 in Cyprus. The Cyprus’ passport program requires a non-refundable donation of €150,000, and the Maltese one, €650,000.

Montenegrin citizenship vs Vanuatu and Caribbean passports

This is how the passport of Montenegro differs from those of Caribbean countries and Vanuatu:

  • Visa-free entry: Same rules on movement within the Schengen zone (90 days per 6 months). However, Montenegrin citizens need a visa to get to the UK, whereas Vanuatu and Caribbean passports grant their holders a 180-day-per-year visa-free stay in the UK.
  • E-2 visa to the US: Obtainable for Montenegrin and Grenadian citizens.
  • Cost: A Caribbean passport is about four times cheaper, with the cheapest option for a single applicant starting at $110,000 (fees included), while the minimum cost of a Montenegrin passport goes over $350,000 (out of this amount, $250,000 is the value of real estate objects that remain the investor’s property).
  • Real estate: The minimum cost of an investment object starts at $200,000 plus about $50,000 in related fees in the Caribbean. However, the Caribbean real estate market is not as stable as Montenegrin.

 CyprusMaltaCaribbeanMontenegro
Min investment amountfrom €2,150,000from €880,000from $100,000from €350,000
Investment object€2 million in real estate acquisition (commercial and residential);
Donation of €150,000
Donation of €650,000;
€150,000 in govt bond acquisition;
€350,000 in real estate acquisition, or €16,000 in rent
Real estate or state fund donationDonation of €100,000;
€250,000 in real estate acquisition
Processing6 months14 months2–6 monthsup to 7 months
Visa-free entry173+ countries, including the UK, EU & Schengen countries, Canada, South Korea, Japan, Australia182+ countries,
Including the US, the UK, EU & Schengen countries, Australia, Canada, New Zealand, Japan, South Korea
129+ countries, including the UK and Schengen countries124+ countries, including Schengen countries
Visa-free entry into the US and CanadaVisa required for the US;
eTA/180 days for Canada
eTA /90 days for the US;
eTA/180 days for Canada
Visa requiredVisa required, possible to obtain E-2 visa to the US
Visa-free Schengen Area365 days/year365 days/year90 days/6 months90 days/6 months
Visa-free UK365 days/year365 days/year180 days/yearVisa required
Who can applyIvestor (age 18+);
spouse;
children under 28 years of age;
parents
Ivestor (age 18+);
spouse;
children under 28 years of age;
parents over 55 years of age
Ivestor (age 18+);
spouse;
children under 30 years of age; parents over 55 years of age
Ivestor (age 18+);
spouse;
children under 18 years of age;
parents
PeculiaritiesNumber of applicants capped at 700/yearNumber of applicants capped at 1800, (not counting dependents)Choosing real estate from a government-approved listNumber of applicants capped at 2000 (not counting dependents)

What is the most profitable way to invest in real estate?

Although the Montenegrin CBI program is an anticipated one and has caused quite a stir, we cannot say for sure whether it will become a worthy competitor to other European CBIs. In case you are seriously considering obtaining Montenegrin citizenship, there is little time for hesitation, as the program will only be in effect until December 31, 2021, and the authorities will only approve 2,000 applicants.

Certainly, making up one’s mind about second citizenship acquisition may take some time, and we understand fully that any steps require thorough examination.

Each program has its pros, cons, and pitfalls. We have compared the most popular investment programs, and we hope our analysis will help you make your choice; however, it is also a possibility you will come to the conclusion that a second citizenship is not something you need at the moment. In any case, our main goal is to explain the details and intricacies of a given CBI program during the consultation, go over relevant cases, and  talk  about both the advantages and disadvantages — all this so our clients can make an informed choice.

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